© k. cuthbertson and d. nitzsche figures for chapter 1 markets, firms and investors (investments :...
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© K. Cuthbertson and D. Nitzsche
Figures for Chapter 1
MARKETS, FIRMS AND INVESTORS
(Investments : Spot and Derivatives
Markets)
© K. Cuthbertson and D. Nitzsche
Figure 1.1 : Brokers and dealers
Market Maker A
Market Maker B
Individual Investor
Broker
Institutional Investor
© K. Cuthbertson and D. Nitzsche
Figure 1.2 : Yields on corporate bonds
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T-Bills AAA AAA AAA BBB JunkBonds
6% 6.07% 6.23% 6.25%7.2%
12% +
Increasing risk
© K. Cuthbertson and D. Nitzsche
Figure 1.4 : Simplified balance sheet
(1) Current Assets (e.g. inventories, receivables)
(2) Fixed Assets(2a) Tangibles (e.g. plant and machinery)(2b) Intangibles (e.g. goodwill)
(1) Liabilities (e.g. accounts payable)
(2) Long-Term debt (e.g. bank loans, bonds outstanding)
(3) Shareholder equity (e.g. ordinary and preference shares)
Total Liabilities= 1 + 2 + 3
Total Assets= 1 + 2a + 2b
Note that net working capital = current assets - current liabilities
© K. Cuthbertson and D. Nitzsche
Figure 1.5 : US industrial sectors
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23/12/88 19/09/91 15/06/94 11/03/97 06/12/99 01/09/02
Entertainment Industry
Oil Industry
Financial Industry
Chemical Industry
Automobile Industry
© K. Cuthbertson and D. Nitzsche
Summary Statistics :(Jan. 95 to Sept. 00)
S&P500 NasdaqMean 1.76% 3.41%Std. dev. 3.94% 7.56%
Correlation : 0.6382(monthly data)
Figure 1.6 : US stock market (S&P500 and NASDAQ)
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03/01/95 03/01/96 03/01/97 03/01/98 03/01/99 03/01/00 03/01/01
Nasdaq
S&P500
© K. Cuthbertson and D. Nitzsche
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27/02/88 27/01/90 28/12/91 27/11/93 28/10/95 27/09/97 28/08/99 28/07/01
Hang Seng
Nikkei
S&P
Dax
FTSE
Figure 1.7 : ‘Local currency’ stock indices
© K. Cuthbertson and D. Nitzsche
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05/02/96 01/12/96 27/09/97 24/07/98 20/05/99 15/03/00 09/01/01
$ per Malaysian Ringgit
$ per Indonesian Ruphia
$ per Thai Baht
Figure 1.8 : Asian crises : spot FX rates
© K. Cuthbertson and D. Nitzsche
Figure 1.9 : Types of traders
• Arbitrageurs : Keep price = ‘fundamental
value’
• Hedgers : Offset risk that they currently
face
• Speculators : Take ‘open’ positions to make
a profit
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